Schlumberger Posts Loss on Restructuring
— NEW YORK (Reuters) - Schlumberger Ltd. <SLB.N>, the world's No. 1 oilfield services company, on Tuesday posted a $2.86 billion loss for the fourth-quarter due to a huge charge to restructure two business units.
New York-based Schlumberger posted a fourth quarter net loss of $4.92 per share, compared to net income of $185 million, or 32 cents per share, in the same period of 2001.
Excluding one-time items, the company reported earnings of 25 cents per share. On that basis, analysts had projected results between 26 cents and 35 cents per share with a mean estimate of 31 cents, according to research firm Thomson First Call.
Schlumberger said operating revenue fell 7 percent to $3.4 billion in the quarter, as oilfield activity continued to slow down.
"Political uncertainty in the Middle East, the strike in Venezuela, and reduced oil company investment in Europe and Africa all contributed to make the business environment in 2002 progressively more difficult," said Chairman and Chief Executive Officer Euan Baird.
Reflecting the slow business environment, the number of rigs drilling for oil and gas around the world -- viewed as a reliable indicator of demand for oilfield services -- fell 7 percent in the fourth quarter of 2002 compared with a year ago.
Stronger crude oil and natural gas prices usually lead to a sharp rise in drilling -- and prices for both commodities were indeed stronger in 2002's fourth quarter.
Crude oil prices in the period averaged $28.25 a barrel, up about 38 percent from the quarter a year. Natural gas prices rose by 52 percent to average $3.64 per thousand cubic feet.
But the climb in energy prices meant little for the budgets of companies that explore for oil and gas. Given uncertainty about the economy -- and about whether energy prices can maintain their highs -- exploration and production companies clamped down on capital spending.
Baird said the outlook remains just as clouded.
"Uncertainty over the direction of the economy makes it likely that this lackluster situation will continue through the first half of 2003," he said.
During the fourth quarter, Schlumberger took a $3.2 billion write-off for restructuring of its information technology foray SchlumbergerSema and for continuing losses at its WesternGeco seismic unit.
As part of the restructuring, the company cut 5 percent of SchlumbergerSema's 32,500 jobs in the U.S. and Europe. The company paid $5.2 billion in 2001 for the information technology enterprise.
Western Geco, a joint venture with Baker Hughes Inc., <BHI.N> cost both companies money due the drop off in the North American land seismic market.
Schlumberger's shares on Tuesday closed at $38.75, down 4.8 percent from Friday's closing price, on the New York Stock Exchange. During the fourth quarter, Schlumberger's shares rose 9.4 percent while an index of oilfield service and drilling companies <.OSX> rose 13.6 percent in the same period..